Aero Inventory Share Discussion Threads

[jr hartley] 01/4/2009 12:28

The only logical reason I can see for the continuing fall is concern over Air Canada's financial position as they are Aveos's biggest customer. They've just replaced their ceo and financial director and it seems there's a genuine concern of impending administration. Fingers crossed this doesn't happen, but if it did can anyone comment on how safe the bills of exchange that don't mature until Feb 2010 would be?
I continue to hold and will try and seek clarification from Rupert Lewin or Hugh Bevan.

[milacs] 01/4/2009 12:11

MDJ8

Heck I never expected the share price to fall below 300p and it did. Never conceived that it would fall below 200p and it did.

Don't expect it to fall below 100p.

M

[juju43] 01/4/2009 12:08

think old evil called this right

[mdj8] 01/4/2009 11:51

1388 is a very lucky number in China!

[mdj8] 01/4/2009 11:49

Phat why do you see it going sub £1-? You seem pretty certain but I and I think some others just can't see why. If there is a rational explanation based on fundamentals, business model, technicals or maybe the city just doesn't like Lewin or has decided to gang up on it or market rumour then please enlighten us......

[phatprofit] 01/4/2009 09:51

nowhere near it mercury - this'll be toiling sub £1 in the near future.

Do NOT add to your holding.


P

[mercury123] 31/3/2009 08:20

Dare I say that I think we have finally bottomed out.....

[jr hartley] 30/3/2009 15:52

The key to reversal in fortunes lies in the extract from the interims below..........assuming we're not taken over short term!

OPERATIONAL IMPROVEMENTS
We continue to focus on all operational aspects of our business and recently a series of changes has
been made to our planning and purchasing activities to try to ensure that inventory meets as closely as
possible the requirements of our customers. Total purchases in March 2009 are anticipated to amount
to less than US$20 million compared with over US$40 million one year earlier as contracts mature and
we start to reap the rewards of tighter planning and greater stock fungibility. More stocks are being
transferred between sites and the total value of these transfers completed in the period amounted to
over US$50 million.

[rogerbridge] 28/3/2009 19:57

I agree MDJ8 short termism reigns here, shorters are at work, however there have been more buys than sells recently. I am pleased that AI walked away from a bad deal, I would have been more worried if they had gone ahead. It shows management strength to me,knowing that the market was expecting a deal and having the determination to put shareholders first.

[ydderf] 28/3/2009 09:18

I have begun buying again 146-148 to date.....unlike most (sensible perhaps) investors, i will continue to add if the price continues to fall. with such a strong net current assets position and strong cash flow from existing (i.e. without expanding and the attendant problems that brings) business, they will show up on any private equity radar, the acquisition cost could be repaid out of the balance sheet and cash flow in about 30 months imho. of course the major shareholders will not want that to happen so will have to make the eps improve rapidly now. private equity will probably be able to begin operating normally in a few months - imagine being able to borrow for 3 over Libor and invest it in a business with an earnings yield (extrapolate projected eps) of 40%+!!!!!

[jr hartley] 26/3/2009 09:39

Total focus on purchasing policy and demand planning, ie working very closely with their suppliers and current customers to ensure purchasing matches demand as closely as possible is what is required here. Understandably, because of the desire to go after major new business, their probably hasn't been enough focus in this area to date. I'm happy to be holding in the knowledge that the directors are now entirely focussed in this area without the distraction of new contract talks. If they can prove themselves in this area during H2 08/09, I'm confident the share price will get back on track.

[mdj8] 25/3/2009 17:51

It's a characteristic of the business model that cash is not generated until some time into the contract. At the outset of a contract cash is passed to the client in exchange for inventory. When the contract beds down cash is generated when the inventory is bought back by the client. Once that inventory is used up even more cash is generated as Aero sources it's own inventory in bulk and at discounted prices. Aero is therefore "suffering" as it keeps acquiring new business which sucks up its cash. What is the company supposed to do? - It seems it's going to have to pace itself to generate cash but in doing so forfeits more rapid growth - indeed it has been doing this and only acquiring new business in manageable chunks. What does the market want business growth or cash generation? - until AI. reaches a tipping point where new business is subordinate to existing business it cant have both. In the meantime it seems Aero will test whether the market prefers cash - by focussing on existing business but it seems the market doesn't like that either. I suppose in the current environment there are not many prepared to look further forward than a couple of weeks....

[tday] 25/3/2009 17:05

Just added a few at a tad under 150p today. Genius or fool - only time will tell.

[darlocst] 25/3/2009 16:52

I followed AI for a while and its clear why the share price is down so much.

Cash.

They are not generating it.

Until they do the market will treat AI. as another Vanco & not touch it with a bargepole.

Edit: And no, I am not short. Not my style.

[mdj8] 25/3/2009 15:46

I have no idea save to say UBS and Fortis have been hurt significantly in this crunch. They have not been long term holders like AXA or Henderson and given they are banks rather than funds may need cash - who knows?

[value viper] 25/3/2009 15:15

why are they offloading ? are lansdowne buying it ?

[mdj8] 25/3/2009 15:11

So Fortis have also been putting downward pressure on the price by offloading stock after UBS did the same a week or so ago. Let's hope thats it for a while and the sells all dry up - the current level is almost beyond belief.

[jr hartley] 25/3/2009 13:54

From interims:

Current assets - total liabilities = $258m
Divide this by approx 52m shares giving $258m/52m = $4.96
Current exchange rate approx $1.41....$4.96/1.41 = £3.52 per share.

Incredibly we can currently buy these for £1.45 and their real assets are worth £3.52 per share. At this rate an airline or MRO could take these out at a premium, pay back the debt and still be quids in with the inventory.

[thepinkpanther] 24/3/2009 16:48

juju

nothing like going short early in the game ie higher prices...........

[rat attack] 24/3/2009 14:46

Certainly not a compelling case in my book. Asset backed!!

[juju43] 24/3/2009 14:25

shorted this this a.m. Evil's case is compelling

[thepinkpanther] 24/3/2009 11:17

its on less than 2 now, as many companies have been.......
its no wonder the share price of some companies explode on bids!

[rogerbridge] 23/3/2009 21:36

Dont agre with EK saying this is a short. It would have been silly to pick up a contract on unfavourable terms.Generating cash is far better. Some nice buys gone through today I will pick some more up during the next few days if they drop any more.Shorters could get badly burnt here if the market continues to rise.

[mercury123] 23/3/2009 19:57

When will this market bounce include poor old Aero - surely it doesn't deserve to be left on the shelf like this!